Kids, Take Your Psychoactives

Earlier this week, Johnson & Johnson (NYSE:JNJ) division Janssen announced that the FDA had approved its antipsychotic drug Risperdal for use in children. The label will now indicate that the drug can be used to treat teenagers 13 to 17 for schizophrenia; it's also been OK'd for short-term use in children ages 10 to 17 with bipolar disorder.

We're not talking about a large group of patients here. Schizophrenia usually develops in patients' mid-20s, and pediatric psychiatrists still debate whether most episodes of euphoric highs and depressive lows in children are really bipolar disorder, or just normal teen angst.

Risperdal brought in $4 billion in total sales last year -- some of which was probably off-label use by children -- so the new indication won't likely spur a major sales increase. Still, Johnson & Johnson will be able to market it to doctors, which might help it gain pediatric market share over lithium, the only other FDA-approved pediatric treatment for bipolar disorder.

Perhaps the approval's biggest advantage is that Johnson & Johnson will be able to target patients earlier than its competitors Zyprexa, made by Eli Lilly (NYSE:LLY), and Abilify, from Bristol-Myers Squibb (NYSE:BMY). Both of those companies have requested FDA approval to treat younger patients with their drugs, but haven't received word yet. Since patients are likely to stay on a drug if it's working, targeting children might convert them into lifelong users.

Unfortunately, the kids will have to remember to take their pill every day. The every-other-week injectable form Risperdal Consta, developed in collaboration with Alkermes (NASDAQ:ALKS), isn't covered under the new guidelines.

The approval for the new indication won't trigger a pediatric marketing extension for Johnson & Johnson, because it already played that card last March, after the clinical trials in children were completed. That move extended the drug's marketing exclusivity from this December's pending patent expiration date until June of 2008.

Johnson & Johnson will likely be hit hard next year when generic versions or Risperdal hit the market. An 80% drop in branded drug sales isn't unheard of when generic competition begins. The new pediatric indication is kind of like using a Dixie cup to add water to a swimming pool with a 3-foot-wide sinkhole at the bottom. It'll add a little bit of revenue, but nothing will stop next year's plummeting sales.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool's disclosure policy believes that laughter is the best medicine.